Rupee rebounds by 135p/$! 2nd best rise in 10 years
24 Aug 2013 11:01 PM GMT
After the government's pep talk, the Indian rupee on Friday made a stunning comeback, snapping a six-session losing streak to rise by 135 paise and close at 63.20, its second-biggest rise in a decade in absolute terms.
Comments from the government and the Reserve Bank of India, which came after the rupee slid to an all-time intra-day low of 65.56 on Thursday, boosted sentiment and also helped local shares rally.
Finance Minister P Chidambaram on Thursday said the rupee is undervalued and has overshot appropriate levels while asserting there is no need for excessive and unwarranted pessimism. The Reserve Bank said it has adequate foreign exchange reserves to deal with the declining rupee. After opening higher at 64.30 in the foreign exchange market, the rupee immediately dropped to a low of 64.75 on initial weakness in equities. It rebounded and shot up at the fag end to settle at 63.20, a rise of 135 paise or 2.09 per cent. Previously, it had flared up by 152 paise, or 3.08 per cent, on May 18, 2009.
'Nationalised banks were selling dollars, probably on behalf of the Reserve Bank. Corporates also sold dollars today as they expect that the government and the RBI are serious towards curbing volatility in forex market,' said Agam Gupta, head of fixed income trading at Standard Chartered Bank.
Barclays cut its forecast of India's FY13-14 current account deficit to about $68 billion from about $80 billion earlier and said the country may be able to almost fully fund the CAD. It said the rupee may recover to about 61 per US dollar in the next 12 months, largely on the back of a narrowing CAD. Finance Minister P Chidambaram is likely to meet FIIs in Mumbai on Saturday in a bid to allay apprehensions about India’s current economic situation and apprise them of steps taken to boost growth and stabilise the rupee.
Comments from the government and the Reserve Bank of India, which came after the rupee slid to an all-time intra-day low of 65.56 on Thursday, boosted sentiment and also helped local shares rally.
Finance Minister P Chidambaram on Thursday said the rupee is undervalued and has overshot appropriate levels while asserting there is no need for excessive and unwarranted pessimism. The Reserve Bank said it has adequate foreign exchange reserves to deal with the declining rupee. After opening higher at 64.30 in the foreign exchange market, the rupee immediately dropped to a low of 64.75 on initial weakness in equities. It rebounded and shot up at the fag end to settle at 63.20, a rise of 135 paise or 2.09 per cent. Previously, it had flared up by 152 paise, or 3.08 per cent, on May 18, 2009.
'Nationalised banks were selling dollars, probably on behalf of the Reserve Bank. Corporates also sold dollars today as they expect that the government and the RBI are serious towards curbing volatility in forex market,' said Agam Gupta, head of fixed income trading at Standard Chartered Bank.
Barclays cut its forecast of India's FY13-14 current account deficit to about $68 billion from about $80 billion earlier and said the country may be able to almost fully fund the CAD. It said the rupee may recover to about 61 per US dollar in the next 12 months, largely on the back of a narrowing CAD. Finance Minister P Chidambaram is likely to meet FIIs in Mumbai on Saturday in a bid to allay apprehensions about India’s current economic situation and apprise them of steps taken to boost growth and stabilise the rupee.
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